BJ's Wholesale's (BJ) Q1 Earnings & Sales Beat Estimates

BJ's Wholesale Club Holdings, Inc. (NYSE:BJ) delivered first-quarter fiscal 2019 results, wherein both top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Despite better-than-expected results, management retained its view for fiscal 2019.

This operator of membership warehouse clubs reported adjusted earnings of 26 cents a share that beat the Zacks Consensus Estimate of 25 cents and increased significantly from 15 cents reported in the year-ago period. The company generated total revenues of $3,143.1 million that surpassed the consensus mark of $3,123 million and grew 2.7% year over year.

Notably, net sales increased 2.5% to $3,069.8 million, while membership fee income advanced 8% to $73.4 million.

Comparable sales rose 2% during the quarter under review. Excluding the impact of gasoline sales, merchandise comparable sales increased 1.9%, marking the seventh straight quarter of growth.

Gross profit increased 4.1% from the year-ago period to $574.2 million, while gross margin expanded 70 bps basis points to 18.7%. Excluding the impact of gas sales, merchandise gross margin grew roughly 30 bps on the back of the company’s category profitability improvement program that has been progressing well.

Operating income increased 1.4% to $71.9 million, while operating margin remained flat at 2.3%. Adjusted EBITDA increased 2.1% to $124.1 million, while adjusted EBITDA margin remained flat at 3.9%.

SG&A expenses increased $500 million, up 4% from the year-ago period.

Other Financial Details

The company ended the quarter with cash and cash equivalents of $29.9 million, long-term debt of $1,543.5 million and stockholders' deficit of $148.3 million. Management projects capital expenditure for fiscal 2019 to be roughly $200 million.

BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise

FY19 Outlook

Management reiterated its forecasts for fiscal 2019, with net sales still expected to be $12.9-$13.2 billion compared with $12.7 billion reported in fiscal 2018. Merchandise comparable store sales (excluding gasoline) are expected to rise 1.5-2.5% compared with 2.2% reported in fiscal 2018. Adjusted EBITDA is projected between $590 million and $600 million compared with $578.4 million reported in fiscal 2018.

The company continues to envision adjusted earnings of $1.42-$1.50 per share for the fiscal, indicating a rise from $1.33 in fiscal 2018. The Zacks Consensus Estimate for the fiscal is pegged at $1.48.

Price Performance

Shares of this Zacks Rank #2 (Buy) company have rallied 14.4% against the industry’s decline of 4.2%.

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